Ron Wyden's smart health-care plan.

Better Health Through Politics

Ron Wyden's smart plan.

America's health-care system runs the gamut from capitalism to socialism, stopping at all points between. At the free-market extreme are 10 million people who buy private insurance without any government help and 48 million people with no insurance at all. At the collectivized end are 5 million military veterans who see government doctors in government hospitals, 32 million retirees covered directly by the federal government under Medicare, and 37 million insured by Medicaid. In the middle are the majority, 153 million workers and their families, who get government-subsidized private insurance through their employers

Jacob Weisberg is chairman and editor-in-chief of The Slate Group and author of The Bush Tragedy. Follow him on Twitter.

A growing consensus recognizes this patchwork as economically disadvantageous and morally intolerable. Viewed as a whole, the American system is inefficient, expensive, and possibly unsustainable, consuming 16 percent of GDP and growing at a rate of 6.4 percent a year. European countries manage to provide universal, high-quality care for half as much per capita. Employer-based coverage is a drag on the economy, tethering workers to jobs they would otherwise leave and harming the competitiveness of American manufacturing by adding to the cost of goods. Health-care spending is a budget-wrecker at every level of government. And for all we spend, 16 percent of the population, including 8 million children, must make do at the system's charitable margins.

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But if the status quo is untenable, the Euro alternative remains an impossible sell. Americans place a high premium on personal liberty and individual choice in all matters. A single-payer system, in which government insures everyone directly, diminishes consumer freedom for the sake of greater equity and efficiency. Many resist making that trade-off, even where it would serve their interests. As recently as 2000, Oregon, which is either the most—or the second-most, after Vermont—progressive-minded state in the country, defeated a single-payer initiative by a margin of 4-to-1.

The action at the moment is all in the big space between the status quo and single-payer. President Bush started the conversation in his January State of the Union address, in which he proposed capping the tax deductibility of employer-provided plans and creating a new tax deduction for individuals. By turning the health-care tax deduction into a kind of voucher, Bush would discipline spending and allow more individuals to afford insurance. His proposal didn't deserve the scorn heaped on it by leading Democrats. A paper from the liberal Tax Policy Center calls the president's proposal "in some respects … innovative and a step in the right direction." But Bush is thinking too small. His plan risks undermining the current employer-based system without replacing it, and fails to grapple in a serious way with the problem of the uninsured.

John Edwards recently became the only presidential candidate to get specific on the subject, when he laid out a plan bolder than Bush's that would build on the employer-based system. Edwards would require companies that don't insure their workers to pay into a fund for the uninsured. Following the trend in Massachusetts and California, he would add an individual mandate, a requirement that anyone not covered at work buy insurance in a regulated market. The chief advantages of the Edwards plan are that it achieves universal coverage without disrupting the way most Americans now receive health care, and that it's straightforward about raising taxes to pay for extending coverage to the uninsured. Its chief disadvantages are that it would do little to control costs and that it fails to break the anachronistic connection between employers and insurance.

Ron Wyden, the Democratic senator from Oregon, would directly sever that link. Wyden is a politically savvy wonk, who in drafting the bill he recently introduced has tried to learn from previous Democratic mistakes. He recently told me he had read The System, David Broder and Haynes Johnson's massive tome on the failure of the Clinton health-care reform plan, no less than five times. (Apparently, Starbucks now offers an intravenous drip.) Wyden's bill is 166 pages against Hillary's 1364, and he thinks he can pare it further. When he was getting started, Wyden drew a grid of the major interest groups and made sure there were plusses as well as minuses for each in his bill. He has support from CEOs, labor leaders, and even one maverick health-insurance executive. And instead of trying to flatten the opposition, as the Clintons did in 1994, Wyden is courting Republicans. He recently got five of the most conservative men in the Senate to join him and four other Democrats as co-signers of a letter to Bush responding to the White House proposal. The letter endorses the principles of universal coverage and cost containment, and proposes that they all work together on a compromise

Under Wyden's plan, employers would no longer provide health coverage, as they have since World War II. Instead, they'd convert the current cost of coverage into additional salary for employees. Individuals would use this money to buy insurance, which they would be required to have. Private insurance plans would compete on features and price but would have to offer benefits at least equivalent to the Blue Cross "standard" option. Signing up for insurance would be as easy as ticking off a box on your tax return. In most cases, insurance premiums would be withheld from paychecks, as they are now.

Eliminating employers as an additional payer would encourage consumers to use health care more efficiently. Getting rid of the employer tax deduction, which costs a whopping $200 billion a year, would free up funds to subsidize insurance up to 400 percent of the poverty line, which is $82,000 for a family of four. The Lewin Group, an independent consulting firm, has estimated that Wyden's plan would reduce overall national spending on health care by $1.5 trillion over the next 10 years and that it would save the government money through great administrative efficiency and competition.

Can Wyden and his allies market this kind of bill as an advance for competition and choice, which it is? Or will opponents succeed in framing it negatively, as they did the Clinton bill in 1994, as an expansion in the scope of government—which is also an accurate description? Will moderate Republicans see their advantage in sharing credit for fixing the system or in denying an accomplishment to Democrats, as they did last time? To design a system that covers the uninsured, removes the medical burden from employers, lowers government costs, and even slightly reduces what the average family spends is no mean feat. But Ron Wyden may soon discover that coming up with the smartest health-care plan we've seen yet was the easy part of the job.